Sir James was one of the HBOS bosses described as 'incompetent and reckless' by the Commission

A spokesman for the European investment firm said on Friday: "Following a discussion with Sir James this morning he has decided to resign from the advisory board."

The commission blamed their "toxic" misjudgments for the bank's downfall and £20.5 billion taxpayer bailout at the height of the financial crisis, and said they should not be allowed to work in the financial sector again.

It found the former HBOS bosses also failed to admit their mistakes and should apologise for their "incompetent and reckless board strategy".

Sir James was chief executive of HBOS from 2001 to 2006 and also former deputy chairman of the Financial Services Authority.

He was a member of the European Advisory Board at Bridgepoint and is also a senior independent director of catering firm Compass.

Mr Hornby's current employers, Gala Coral, today said he had their "complete backing".

Simon Clare, Coral spokesman, said: "Coral as a business is performing extremely well and that coincides with Andy's tenure as chief executive.

"He's doing a great job and we're delighted with the job he is doing. He has the complete backing of the business."

Sir James and Lord Stevenson have so far retained their titles, though the Royal Bank of Scotland's disgraced former boss Fred Goodwin was stripped of his knighthood.

Andrew Tyrie, the Conservative MP who chairs the commission, refused to say whether he would like to see Sir James or Lord Stevenson lose their titles, saying the public were not concerned about knighthoods.

"That is not our jobs, we were not set up as a Banking Commission to strip people of their titles," he told BBC Radio 4's Today programme.

"I don't think the public are so concerned about knighthoods, what they want is reassurance that they won't get hit by this again, that people who do such damage are identified and are prevented from practising and that people should not be allowed to gamble with our money and then walk away with huge bonuses."

Lord Stevenson came under particularly heavy fire in the report, having infuriated the commission by claiming reckless lending at HBOS was not his fault because he was "only there part-time".

It said he had shown himself "incapable of facing the realities of what placed the bank in jeopardy from that time until now".

Peter Cummings is the only former HBOS director to have been penalised by the FSA, after being fined £500,000 and banned for life from working in the City last September.

The commission said in the report: "The primary responsibility for the downfall of HBOS should rest with Sir James Crosby, architect of the strategy that set the course for disaster, with Andy Hornby, who proved unable or unwilling to change course, and Lord Stevenson, who presided over the bank's board from its birth to its death."

Mr Tyrie said on the release of the report: "The HBOS story is one of catastrophic failures of management, governance and regulatory oversight."

He added that regulators have "a lot of explaining to do".

"From 2004 up until the latter part of 2007, the FSA was not so much 'the dog that didn't bark' as 'the dog barking up the wrong tree'."

A Treasury spokesman said: "The failure of HBOS was a symptom of the financial crisis and the regulatory system in place at that time. The Government is committed to learning the lessons of the past and protecting taxpayers from bank failures in the future. That is why it has fundamentally reformed the way financial services are regulated in this country.

"The launch of the new regulatory system earlier this week is the start of resetting the system of financial regulation in our country. The new system represents a fundamental change in how financial services will be regulated in the future. The Government has done away with the discredited system that failed to sound the alarm as the financial system went wrong, and put in its place a new system that puts the Bank of England back in charge and that will help ensure a strong, safe and successful financial system in Britain."

A spokesman for Compass, one of the country's largest catering companies, said Sir James would remain a senior independent director, and declined to comment further.

Sir James also remains chairman of the car credit company Money Barn, a spokeswoman for the company said. She declined to comment further on the commission's report.

Prime minister David Cameron said: "We've changed the entire regulatory system. We've swept away the failed system that Gordon Brown had put in place. A new regulatory system is now there and is now working and will make sure that these things can't happen again."